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U.S. Wholesalers Confront A Changing Retail Landscape

Decades of consolidation have transformed the landscape for U.S. spirits and wine distributors, but changes at the retail tier have been equally pronounced. The expansion of large chains has driven wholesalers to sharpen their focus on national accounts—even for single-state distributors, some of which have only recently begun working extensively with chains.

Five years ago, Maryland-based Total Wine & More operated 70 stores in 11 states and had revenue of around $1 billion. By the end of last year, Total Wine had about 130 stores in 18 states, and revenue had climbed to approximately $2 billion. The chain shows no sign of slowing its expansion pace, and is now targeting a revenue mark of $3 billion in 2019.

Late last year, Total Wine entered Massachusetts, opening a store in Natick, 20 miles west of Boston. Five years ago, that move would have been unlikely, as chains bypassed the Bay State because of its licensing restrictions. But in late 2011, Massachusetts legislators voted to increase the retail license cap, initially raising it to three per owner, then to seven this year. The limit will rise to nine in 2020. As a result of such changes, regional and local retail players—like Target, Wegmans and Market Basket—are now making spirits and wine a key component of their strategies.

Elsewhere, chains are also looking to expand their presence in wine and spirits. In Colorado, a current ballot initiative proposes to raise the number of licenses permitted per retailer to 10, up from the current limit of one. And in Florida, Walmart, Publix and Winn-Dixie have increased from a combined 54 locations with spirits licenses in 2005 to 467 locations today.

Meanwhile, in Texas, Walmart—the state’s top beer and wine retailer—is aiming to sell spirits as well. For more than a year, Walmart has been locked in a court battle with the Texas Alcoholic Beverage Commission (TABC) over a ban on publicly traded companies selling spirits in the Lone Star State. Given the trend of chains expanding their influence across the country, even distributors who operate in a single market or region tell SND they’re devoting more resources to their national accounts business.